India’s Q2 current account deficit at $3.4 bn falls to 0.6% of GDP

Mumbai, Dec 13 (IANS) India’s current account deficit (CAD) for the second quarter ended September, at $3.4 billion, fell by over a percentage point to 0.6 per cent of GDP on the back of a lower trade deficit, Reserve Bank of India (RBI) data showed on Tuesday.

The CAD in the corresponding quarter of the last fiscal at $8.5 billion was higher at 1.7 percent of GDP.

“The contraction in the CAD on year-on-year basis was primarily on account of lower trade deficit ($25.6 billion) brought about by a larger decline in merchandise imports relative to exports,” the RBI said in a statement.

Private transfer receipts, mainly composed of remittances by Indians overseas, amounted to $15.2 billion, registering a decline by 10.7 per cent from the level a year ago.

Non-resident Indian (NRI) deposits also registered a 50 per cent decline to $2.1 billion, from $4.2 billion in the same quarter of the previous fiscal.

“In the financial account, net inflows of both foreign direct investment and portfolio investment were significantly higher in the second quarter,” the RBI said.

For the first 6 months of the current fiscal, the CAD narrowed to 0.3 per cent of GDP from 1.5 per cent in the same period a year ago owing to a contraction in the trade deficit, said the central bank.

India’s trade deficit narrowed to $49.5 billion in the first half, from $71.6 billion in the same period of the last fiscal.

Net foreign direct investment (FDI) inflows during 6 months rose by more than 28.8 per cent over the level during the corresponding period of the previous year.

Portfolio investment recorded a net inflow of $8.2 billion as compared to a net outflow of $3.5 billion in the same period a year ago.

RBI also said thaat during the first half ended September, there was an accretion of $15.5 billion to foreign exchange reserves.